A former Obama administration official predicted that the passing of the $1.9 trillion coronavirus stimulus package had a 33% of accelerating inflation in the next several years.
The debt ceiling stalemate continues as Republican lawmakers walked off the discussion table on Friday only to join back in the evening. President Joe Biden and Treasury Secretary Janet Yellen have warned of serious consequences if a debt deal is not reached.
Against the backdrop, former Treasury Secretary Larry Summers weighed in on the wrangling between the Republican and Democratic parties.
“I wish it hadn’t happened, but I’m not surprised,” Summers said in an interview with CNN, referring to the temporary pause in talks.
Summers had previously criticized Biden’s spending on the coronavirus stimulus package as irresponsible.
“There is always posturing in these talks and walking out, is a kind of posturing,” he said.
For both sides of the aisle, there appears to be a need from each side to feel like they negotiated as hard as they possibly could, and for House Speaker Kevin McCarthy (R-Calif), it is all the more important, Summers said. This is especially because of the “fanatics” that are in some parts of the caucus, he said.
“So, walking out of the talks at least once as leverage and bluster is probably part of the playbook,” he said.
Summers added that it is in the mutual interest of everybody — more importantly, in the massive interest of the country — to reach a deal so that some kind of experimentation of what a default could look like wouldn’t need to be implemented.
Summers also suggested that Biden invoking the 14th Amendment, which allows the country to keep paying off debts without Congressional approval, is not a viable solution.
“The very substantial majority of legal opinion is that this would be a highly problematic course,” the former treasury secretary said. People would also know that it would be open to challenge in the courts, he said.
“I think under those circumstances, everything about the finances of the United States would come under a cloud. So I think that would not be the right tactic,” Summers said, noting that the debt ceiling impasse should be worked through a normal process.
In order to scare both sides into reaching a solution, “we need to get closer to the brink,” Summers said.
“There needs to be a broader understanding of that we are past a certain point … you really are doing real damage to the country, and you can’t buy more time,” he said.
Democratic leaders have states that President Biden would cave into McCarthy’s demands as the deadline for June 1 nears in the next week.
President Biden and McCarthy are expected to negotiate on Monday as negotiations for the debt ceiling are far from an agreement.
Produced in association with Benzinga
